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Ralph Nader > In the Public Interest > GM and Saturn Incentives

General Motors made the press last week by announcing a new subsidiary to build its small Saturn automobile beginning sometime in 1988 or 1989. The media resonated with the pulsating prospect of the Big Company finding cheaper ways to build small cars and stave off the Japanese imports. Governors, Mayors and local development officials all over the country flooded the GM switchboard with calls offering “incentives” galore to snare the
factory for their community. But, as is usual with Generous Motors, there is much more that was not announced that day about the company’s strategy.
First, GM’s top priority in the small car field is to import hordes of small cars from Japan and Korea under the GM brand name. The basic agreements to do so are already complete. To rebut the charges that GM is exporting jobs and worsening America’s balance of payments, the Saturn project is launched. Saturn, however, will only replace a portion of existing GM small car capacity and then not until the end of the decade. But politically, Saturn provides the camouflage of a vigorous domestic loyalty by the auto giant.

Second, GM made no mention of any technological innovations for the consumer’s benefit which should be coming with brand new Saturn. Instead the company’s emphasis dealt with generally the automation innovations to build the vehicle. There was no mention that the vastly increased productivity and research marking the new plant would decrease customer prices or give motorists dramatic new safety, durability, fuel efficiency and pollution controls. All of which is consistent with GM’s practices — build a super modern factory to produce the same old cars, give or take some stylistic or gadget gimmicks like a talking computer.

Third, GM’s formal response to the telephone calls regarding plant location was another contribution to its lengthy legacy of prevarication, to wit: “General Motors does riot believe so—called bidding wars are in the best interests of the company or a community seeking a new plant.” Yet on the remains of the 450 acre Poletown community in Detroit, GM stimulated just such a bidding process in 1980 and netted a $350 million package of local, state and federal subsidies for construction of its highly, yet to be completed, automated Cadillac plant.

And now in Kansas City, Kansas, GM is dangling prospects for a new plant in 1988 in front of a groveling band of local politicians and businessmen. Before GM made any commitment whatsoever, the city closed down the Fairfax Municipal Airport in order to give GM 300 acres on terms that a local chamber of commerce chairman admitted was “close to a gift.” This private business executive, Mike Dugan, has been asked by city officials to negotiate in secret with GM over the scope of the taxpayers’ subsidy package to the second richest industrial corporation in the world. If past GM habits are any measure, the company is demanding massive property tax abatements for years, free sewage hookups and other facilities.

Here are thousands of Kansas City residential taxpayers and small businesses dutifully paying their property taxes and getting no subsidies, while GM is forging a deal beyond closed doors with a private representative of city officials. But even if a deal is forged, GM’s practice is to always leave its door open to get out if it wishes. There is no contractually binding agreement with an adequately posted bond that would be forfeited if GM cancels after the city has gone all out with land, facilities and tax breaks.

GM’s Chairman, Roger Smith, wants no open citizen process to decide whether the people of Kansas City want to put GM on their welfare rolls in order to get a super—automated plant. But David Thelen, a University of Missouri professor who has studied these matters says that a voter referendum is the best way to resolve the issue. Prior to such a vote a public discussion is needed to inform the local citizens about what kind of plant; how many workers really would be employed, and what the taxpayer impact is going to be.

Professor Thelen put the case for a vote pithily: “The politicians come in and say, ‘Close the airport, give them the land, give them the shirts off our backs,’ Arid the taxpayers (might) say they don’t want it. “What better way to resolve it than to let the taxpayers decide.”

The way GM, and dozens of other rich corporations demanding handouts, are going, the time is riot far off when this kind of corporate socialism, that divides and rules frantically bidding communities, will become the new free enterprise — free to rip off the taxpayers for enterprise.